Stock scream room

Discussion of the Stock portion of the Permanent Portfolio

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pmward
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Re: Stock scream room

Post by pmward » Tue Oct 13, 2020 12:26 pm

It's all about stimulus. If congress can pull their heads out of their collective arses and can actually get a stimulus deal through at some point, markets will continue to go up to dizzying heights. If they fail to do so, stocks will fall until they eventually force their hands similar to how they forced Powells hand to flip dovish in Q4 2018. Back in March after a 30% drop in the S&P congress was willing to do whatever it took in the form of stimulus. This same scenario will play out again if they continue to do nothing. The market will force their hands if they have to. Either way, the stimulus will inevitably come and the market will go up to substantial new all-time highs afterward just like it did following Q4 2018, imo. It may be a bumpy road though, at this point in the cycle volatility should be assumed to continue until the secular bull market finally ends.

The economy has nothing to do with stock prices these days. The only thing the election matters for is how much stimulus and how fast it will come. I actually think a Biden win will be better for stocks than a Trump win because of this, especially if the senate also flips blue, because then the real spending will begin, and in turn the true 1998-2000 like melt-up to end the bull market from the 2009 lows can truly begin in earnest. When we inevitably get fiscal stimulus fully on board permanently like we got monetary stimulus fully on board permanently coming out of the 08 crisis, there will be nothing stopping the market from going to 5,000+ before the bull market finally tops and starts the next true secular bear market. There is a lot of risks at this point, but there is also a lot of potential rewards. Selling stock now could look very silly in a year or two. Fiscal is necessary to keep the economy afloat at this point, and as such the fiscal will come, it's not a matter of if, it's only a matter of when. At least this is another angle worth considering before actively selling stocks on the assumption that they have to go down in the near to mid term. Remember Corto we had a similar discussion in this thread back in March that you can scroll back to, where I said they would do whatever it took to have the market back at all time highs by the election, and you didn't see how it was possible then either. So maybe once again this other angle is one worth looking at and at least considering before selling stocks. Eventually, sure every bull market dies some day, but if the whole country being under Corona lockdown couldn't kill the bull, it means the bull is still strong enough to keep going, and that in turn means the bull has a much higher destination in mind before it's willing to give up the ghost. That's my current take on things at least.
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Cortopassi
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Re: Stock scream room

Post by Cortopassi » Tue Oct 13, 2020 2:05 pm

pmward wrote:
Tue Oct 13, 2020 12:26 pm
It's all about stimulus. If congress can pull their heads out of their collective arses and can actually get a stimulus deal through at some point, markets will continue to go up to dizzying heights. If they fail to do so, stocks will fall until they eventually force their hands similar to how they forced Powells hand to flip dovish in Q4 2018. Back in March after a 30% drop in the S&P congress was willing to do whatever it took in the form of stimulus. This same scenario will play out again if they continue to do nothing. The market will force their hands if they have to. Either way, the stimulus will inevitably come and the market will go up to substantial new all-time highs afterward just like it did following Q4 2018, imo. It may be a bumpy road though, at this point in the cycle volatility should be assumed to continue until the secular bull market finally ends.

The economy has nothing to do with stock prices these days. The only thing the election matters for is how much stimulus and how fast it will come. I actually think a Biden win will be better for stocks than a Trump win because of this, especially if the senate also flips blue, because then the real spending will begin, and in turn the true 1998-2000 like melt-up to end the bull market from the 2009 lows can truly begin in earnest. When we inevitably get fiscal stimulus fully on board permanently like we got monetary stimulus fully on board permanently coming out of the 08 crisis, there will be nothing stopping the market from going to 5,000+ before the bull market finally tops and starts the next true secular bear market. There is a lot of risks at this point, but there is also a lot of potential rewards. Selling stock now could look very silly in a year or two. Fiscal is necessary to keep the economy afloat at this point, and as such the fiscal will come, it's not a matter of if, it's only a matter of when. At least this is another angle worth considering before actively selling stocks on the assumption that they have to go down in the near to mid term. Remember Corto we had a similar discussion in this thread back in March that you can scroll back to, where I said they would do whatever it took to have the market back at all time highs by the election, and you didn't see how it was possible then either. So maybe once again this other angle is one worth looking at and at least considering before selling stocks. Eventually, sure every bull market dies some day, but if the whole country being under Corona lockdown couldn't kill the bull, it means the bull is still strong enough to keep going, and that in turn means the bull has a much higher destination in mind before it's willing to give up the ghost. That's my current take on things at least.
Thanks. I did drop my overall stock allocation from 31% to 30%. No major change, just something that makes me feel a little better. I'd rather nibble some gains off on the way up, if that's the case.
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Re: Stock scream room

Post by mathjak107 » Tue Oct 13, 2020 2:40 pm

That happens at times ...for the year 2008 gold was up and the miners got hammered....miners are stocks first and a play on gold second .

They are subject to all the things stocks are ...earnings ,revenue , strikes , workers being healthy and able to work , mgmt , political issues ,etc ....miners are not the same as gold despite having their profits rise and fall with the price
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Re: Stock scream room

Post by Kriegsspiel » Fri Oct 16, 2020 10:28 am

As Cullen sees it:
Now, this is really important to understand when you’re trying to understand why the stock market has reacted and also why the coming couple of years could actually be very good for the economy. In short, the stock market is front-running the probability of a vaccine. And in the case of a vaccine life essentially returns to some semblance of normalcy reflecting where we were in 2019. So, let’s say we get a vaccine in mid-2021. In that case the economy will begin to aggressively soak up all that excess labor to meet all that pent up demand. You’ll go to dinner more, movies more, take two vacations next year. Etc. As that pent up demand soaks the economy in 2021/2022 the labor market snaps back aggressively and by the end of 2022 the economy looks more or less like it did in 2019. The end result will be this weird “recession” that wasn’t really a cyclical recession at all. Instead, it will look more like a continuation of the 2019 expansion with 2-3 year pause within it. link
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Re: Stock scream room

Post by dualstow » Mon Nov 09, 2020 7:06 am

Market is set to surge 5% — that’s more than 1400 points for the Dow — on Pfizer’s 90% effective vaccine.
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Re: Stock scream room

Post by pmward » Mon Nov 09, 2020 7:46 am

dualstow wrote:
Mon Nov 09, 2020 7:06 am
Market is set to surge 5% — that’s more than 1400 points for the Dow — on Pfizer’s 90% effective vaccine.
Yeah I was pretty shocked to wake up and see that myself, even though when I went to bed they were already up ~2%. And with volatility continuing to collapse there is still room for much more upside as lower volatility triggers systematic flows into stocks via large hedge fund strategies like risk parity, vol-targeting, and the like.
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Re: Stock scream room

Post by Tyler » Mon Nov 09, 2020 9:59 am

If you think stocks are exciting today, take a look at small cap value. 8)
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Re: Stock scream room

Post by Smith1776 » Wed Nov 11, 2020 10:55 am

Indeed! My value fund has really popped!
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Re: Stock scream room

Post by doodle » Mon Nov 16, 2020 7:02 pm

This market is getting insane. Cramer is attributing it to younger inexperienced investors who have only seen stock gains for the last decade. To them the party can go on forever. I'm starting to slowly divest. We hitting some pretty lofty numbers here. Id be surprised if we see 4k on the SP before we see 3k or less. Anyone else getting that feeling?
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Re: Stock scream room

Post by buddtholomew » Mon Nov 16, 2020 7:07 pm

I don’t disagree but certain areas of the market are either still -ve YTD or only slightly positive <+5%.
REITs fall into the first camp and SCV in the latter.

I’ve lightened up on SPY and kept investing in SC, SCV and REITs.
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Re: Stock scream room

Post by pmward » Mon Nov 16, 2020 8:38 pm

Not at all, see my thread in the VP section for the long version of my thoughts. All leading economic and technical indicators are still up and to the right. We are now getting rotation into small caps and value which is really confirmation more than anything else that this rally is for real. It's no longer just 5 stocks at the top dragging the market up, the rally has broadened out. That being said, a pullback to 3k like you mention would be a healthy thing. I would buy that dip. I have no worries at the moment of a secular bear market. That could change any day with emerging info, but for the moment Cramer is looking dead wrong (but what is new there???). Not to mention Santa is coming to town, and we know how strong the market tends to perform from late December though about Feb.
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